By Michael Piro – COO, Indochina Capital Between 2015 and September 2017, there were 71 licensed condotel and officetel projects corresponding to a total of 25,639 units. By the end of 2019, the proportion of condotel units surpassed the supply of hotel rooms (56 per cent versus 44 per cent). The initial driving force for the condotel boom came from the idea that this product is more innovative than traditional residential or hotel products. It was a product that could promise higher financial returns in coastal or touristic locations and allowed buyers to capitalise on a hotel’s brand recognition, affiliations, reservation systems, and management expertise when managed by a renowned operator.Furthermore, developers who used guaranteed returns, pledging high profits with interest rates of 8-12 per cent per year over a period of 5-10 years to attract customers, only added fuel to the fire. With the increased number of condotel projects, competition became fierce and developers started to offer higher guaranteed returns, some up to 15 per cent. Experts started to voice their doubts on guaranteed returns and the lack of regulations for ownership certificationa and mechanisms to protect buyers. On February 14, the Ministry of Natural Resources and Environment (MoNRE)… Read full this story
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